All men’s miseries derive from not being able to sit in a quiet room alone. – Blaise Pascal

Posted by: donmihaihai | October 2, 2010

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Waiting
When it comes to investing, I spend greater part of my time waiting. Waiting for the share price to move, waiting for quarterly, half yearly and full year results and wait for dividend if company declared one. And currently I am waiting for Micro Mech annual report.

No surprise is good surprise
I am not expecting to find any surprises, good or bad when reading the annual report. This is good. A generally well run company usually doesn’t “give” out surprises like announcing good contracts won, bad things happening or next lap of growth kind of stuff. A generally well run company is already on a path toward where it should be and more news only create publicity and publicity is not one that create shareholder value. But of course, smart peoples will know how to benefits from it.

Make that jump
If by coming out and telling people that “Hey we are in for good Corporate Governance as we are in for the pledged.” will created better rewards, what will BOD do? Jump in and hopefully able to gain that rewards. But what kind of rewards? Ask the public faces of about 10% of all listed companies that have given their support. What they say might not be what in their minds. Reward and benefit work far wider than I can think of.

Do it again
With the recent change of CEO, SGX is coming out with lot of initiatives. The main aim is of course creating a better and bigger market place for people to trade. With more trading, SGX can generate more money. Few years down the road, if he can do it again at SGX, think of his bargaining power when he shows his track record. But what might potentially make his record good which at the same time will do wonder for shareholder might not be good in general for everyone. Having more people trading is like having a third casino or should I say this is legally the 1st casino. And unlike the two wonderful IRs in Singapore, this requires little capital.

Not everything is bad
Building up bond market with lesser minimum amount to trade is wonderful. I cheer and support it.

Money is all the same
Whether it comes from working as a technician, stock broker, auditor or sales, it is still the same money.
In stock investing, whether it comes from trading, dividends or long term capital gain, it is still the same money.
For company, it may be in different industry, different countries or even different management style. But at the end of the day, earnings generated are still the same money.
That is the same if we choose to put extra cash into fixed deposit, equity or bond.
Money won’t tell me, “Hey I am different you know.”

Listen to old man
When the saga broke off in minibond, MM Lee said something like you know there was more risk by looking at the yield. How true. But who want to listen to an old man with him basically telling you that you are stupid! I like it that SIA come out with a portion of their newly issued bond for retail. The coupon rate is low but hopefully many local listed companies will follow and create a local bond market. But a local bond market will create lot of more problems because as time goes by, many companies might default on their bonds.

Who say SIA can’t and won’t default? For a 5 year bond, anyone who purchase it must be reasonable sure that the company will not just pay the yearly coupon, but able to repay the debt in full either by earnings, new debts or raising capital. 5 years is not 5 months. If this market is to build up, we will see all kind of bond from all kind of company with all kind of duration.

It is not just about the yield only. If 4 year downs the road, I have some extra cash with no where to put it and SIA bond trading at par. Knowing that SIA is able to repay with FD at 0.1 to 0.2%, it is not hard to know what I will do.

Like father like son
But bond is not FD. There is no reason to buy bond, not even SIA bond just because of the low yield FD is giving.

But I guess this will be the direction. And perhaps sometime down the road, when new saga emerged from bond, “someone” might come out and say, “Hey you stupid, look at the yield, you think bond is like FD.” And we will respond angrily…. Like father like son.